Your entrepreneurial prowess has finally helped you reach the point where your startup is ready to scale. Now it’s time to move onto bigger and better things.
How to Scale a Business: The Ultimate Guide
As exciting as this is, scaling a startup is also a high-risk growth phase of any new business. In fact, according to StartupGenome’s research, premature startup scaling is the number one cause of business failure.
So if you want to buck the trend and help your business succeed, you need to know how to scale a business the smart way.
Use this definitive guide as your starting point. Here, we’ll walk you step-by-step through how to scale, what decisions to prioritize, and what obstacles you might face.
Start With a Solid Strategy
Work on developing a strategy that is going to underpin your growth plans.
Start with an honest look at where your business is today. Your startup will have its strengths and weaknesses, and knowing what these are should help shape your strategy.
When creating a growth forecast for your business, use this information to help look at areas of the company you need to strengthen to support your expansion plans.
Product and Market Expansion
When it comes to revenue, how are you going to grow from where you are today?
Do you have new product offerings to launch in your existing market? Or are you looking to expand a current product into a new market segment?
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Don’t try to do all things at once. Create a staged plan with clear milestones so that your business can focus its efforts and resources on conquering one new market or product stream at a time.
Focus on Your Financial Goals
Your scaling ambitions need to be matched by an equally clear financial plan.
What are your revenue and profit targets for your business over the next 12 to 24 months, and do you have a clear idea of how you will meet these targets as you scale?
Be conservative and critical with your financial forecasting.
Even if you have experienced rapid growth in your business so far, once you hit new challenges, bigger competitors, and fierce markets, make an honest assessment about how your business will fare.
Agree on a Budget
Once you know your financial goals, it’s time to put together a budget for your scaling plans. You must examine where you want to invest your money and what options you should prioritize to help you achieve the best ROI.
Look at how you are going to fund your growth financially. A business loan will give you flexibility and is easy to arrange. Depending on your growth plans, you can also look at equity investment from venture capital firms.
Don’t forget to also look at any business grants you may be entitled to receive. The Small Business Association has a list of available awards on its website.
Choose Your Investments Wisely
When it comes to growing your business, you need to stick to a budget so that your spending doesn’t damage your business cashflow. Think carefully about how best to invest in the growth of your business.
External consultancy may seem like an expensive use of funding. However, specialist consultants can have a positive impact on a startup, especially if they have experience in scaling a business.
Look for consultancy experts in particular areas where you need to focus your growth plans. For example, if you want to get a better online presence, look at experts in inbound marketing who can guide you.
Think about your existing technology and software and ask whether it is time for an upgrade. Some technology will be specifically designed for small and startup businesses but may not appropriate for business growth.
Start with an audit of your existing technology, software, and also your manual business processes. Which areas are slowing you down? Which ones may need a revamp as you scale?
Think about additional demands from customers and employees as you grow.
Customers, for example, may expect more sophisticated software and web platforms when dealing with a large company. Perhaps they want real-time shipping information, for example.
Likewise, as you take on more staff, your existing internal processes may not be well set up for that growth. Payroll is an obvious example of where you might need to spend money.
Outsourcing and Hiring
When it comes to scaling, you must start thinking about how to invest in the skills and experience you need to grow your business.
One question you should ask yourself is whether you need to hire more people, hire short-term freelancers and contractors, or use third-party outsourcing companies.
For in-house expertise where you have a competitive advantage (product development is a good example), it makes sense to keep this internal. You should prioritize hiring people with those types of skills.
However, other areas of expertise might only have a support role for your business as you grow, such as accounting or human resources. In that case, look at whether it is cheaper to outsource or to use a third party.
Management and Leadership
Someone who has the right skill set to lead a startup may not be the best expert at growing and scaling a business. These are often difficult decisions for startups, especially since company founders are often on the leadership team.
That is an area where you need to be objective at what leadership skills your business will need shortly.
That doesn’t mean removing the people you already have, but adding additional leaders who can help you fix those experience and expertise gaps.
How to Scale a Business the Right Way
Scaling is a unique opportunity for any startup. If you’ve made it this far, then your business has the potential to thrive and become a big-name brand.
But that means getting to understand precisely how to scale a business and making sure your scaling strategy is correct from day one.
Scaling isn’t the only option for your startup. For more advice on what to do once your new business is established, check out our other blog posts on strategies and marketing that will help your startup to thrive.
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